Bill Gates's office, housed in number 8 of the 45 buildings on Microsoft's campus, has few personal flourishes. At any other Fortune 500 company, it might house someone of the rank of, say, vice president for community relations.
The desk is a slab of plain oak, and the only pictures on a wall are two framed covers from the Economist given to him by his sister Libby: they show a diagram of an Intel chip and a chart describing the bandwidth of various radio frequencies.
His PC is a Toshiba laptop with a docking station and two oversized monitors (one screen is separated into four quadrants, which stream information from selected websites all day).
A nubby grey upholstered couch rests on a beige industrial carpet in front of a square maple coffee table surrounded by four chrome-based, green and blue wool-covered Breuer-style chairs.
The only ostensible personal touches are several family pictures on a credenza behind his desk and a single picture of a doe-faced Gates beside Paul Allen, encircled by the handful of employees who helped launch Microsoft. This familiar picture, with its innocent faces, speaks to a basic Microsoft contradiction. On the one hand, it captures the youthful zeal, the idealism of people who embraced software as a tool to change the world, to do incredibly cool things. Less apparent in those unlined faces is the competitive zeal that helped trigger a government lawsuit.
On this day in the middle of the anti-trust lawsuit, Gates wore a handsome, royal blue open-necked dress shirt buttoned at the sleeves and embroidered with WHG, navy slacks, unpolished black loafers, and clear-framed oval glasses. His skin was the colour of an eggshell, a pallor born of having spent too many hours indoors.
The previous afternoon, Melinda Gates had given birth to their second child, a son, and Gates had spent part of the day at the hospital. On the day I saw him, Microsoft would announce the birth; yet even though I was not a stranger, Gates uttered not a word about this happy event.
With Gates, impersonal behaviour is the norm. Visitors are often amazed that he fetches a soda for himself and neglects to offer one to them. Upon greeting me, Gates plopped on to one of the chairs, leaned forward and folded his arms across his thighs, and began rocking rapidly back and forth, slapping the carpet with the soles of his loafers, creating the impression that his body was a metronome.
As Gates rocked back and forth in his chair during my visit, he was as agitated at what he thought of as the ludicrousness of the government's case as he had been a year before. "There is no monopoly," he told me. "Even with all the great people we have we face probably more intense competition now than ever before."
Did he sometimes feel, as a friend had said, like Joseph K, accused of crimes he did not comprehend? "I don't know Joseph K, sorry." On being told that Joseph K was the main character and victim in Franz Kafka's The Trial, Gates said, "He sounds like my kind of guy!"
The Justice Department believed Microsoft was a monopoly whose intent was to hurt Netscape. They believed Gates and his employees often behaved like thugs. Now, a year after he had failed to reach an out-of-court settlement that could have avoided this trial, did Gates regret having gone to court?
"I wish we could have settled. I wished that at the time. I wish that now." The stumbling block, he said, was that he couldn't go back to the government for permission each time he wanted to add a new feature, just because a competitor like Netscape whined about it. What about coercion, I asked - the charge that Microsoft muscled Intel to stay out of the software business? "I don't know what muscle means," he said.
What if his daughter came to him some years hence and asked, "Dad, how do you explain some of these e-mails and things like the threat to cut off Netscape's air supply?"
Gates was composed, but he answered in a shrill voice. "A great lie! A great lie!" he cried out. "An unbelievable lie!" It was secondhand hearsay, he said. His voice rising, yet controlled, he went on, "Did anyone utter those words? Our e-mail, every piece of it has been searched. I wish we had found somebody who had said it. Then we could take him out, and we could hang the guy, then we'd say, 'OK, mea culpa. We found him - the guy who said I'll cut off your oxygen'."
"First of all, there's no law against saying that. Second of all, I never heard anybody say it. Third of all - hey, if there's any company that you know damn well whether it was said or not, this is the company. Every piece of e-mail I have ever sent for the last 10 years has been read and read, and if there is any way that people can misconstrue any statement that I've ever made it has been done. You look at any e-mail sent by me or received by me and tell me what it is you think is at all inappropriate?"
Microsoft executives don't see themselves the way they are portrayed in a courtroom 3,000 miles away. By contrast, to a monopolist who has the luxury of sitting back and behaving in a leisurely fashion, Microsoft executives feel embattled.
Dr James Allchin, who supervised Windows, said: "I feel like we're on the brink of disaster every day. If you're reading newspapers and watching what's happening - new devices, new operating systems, attacks that claim intellectual property means nothing - it's like a massive attack all the time."
External threats
He worried about an attack from Sony and its "fixed game machines, because they're growing up", about cable boxes that could control all home electronics, about handheld personal digital assistants that can perform multiple tasks, about open-source software, about the "megaserver threat" posed by an AOL online operating system where "once you're in an AOL environment, you're in it holistically", about how the distinction between hardware and software companies blurs as Intel and Dell and IBM invest in software, and AT&T is now a cable and an internet-access as well as a telephone company.
Microsoft in 1999 spent an extraordinary $3bn on research and development. This represented about 17% of its revenues, a figure that dwarfs the 6% IBM spent, or the 10% of revenues expended by such companies as Intel and Sun.
A sizable portion of this budget is earmarked for pure research - for recruiting and funding the best physicists and mathematicians and electrical engineers to undertake theoretical work that does not have a clear product payoff. In an era when such theoretical research is usually sacrificed as impractical and companies strive to cut costs and drive up their stock price, Microsoft is a rare oasis.
It is also, needless to say, a place seeking to dominate the realm of new products: an electronic encyclopedia on Africa, Encarta Africa; browsers for wireless devices; web television, which brings e-mail and the web to television sets; PCs that accept voice commands and translate handwriting into type; PCs in cars that function as radios and CD players; and navigation devices that offer voice instructions.
Rick Thompson, vice president of the hardware group, described his 225-employee division as "my own little sandbox". Most of their research efforts fail after they come to market. "It's a lot like the movie business. There are a lot of flops."
Doug Heinrich, who is director of business development and is working on speech and handwriting recognition, said the plan was to include at least some of these innovative features in a version of Windows 2000.
At Microsoft, what the US government calls "bundling" is referred to as "integration", and not without reason. Integration lets programs running on Windows interact seamlessly, allowing users to switch back and forth with greater speed and ease than ever before.
Microsoft claims such additions serve consumers. The US justice department claims they were intended to solidify Microsoft's monopoly. They probably do both. After all, Microsoft benefited consumers by reducing the price of browsers, and at the same time they undermined Netscape.
Microsoft executives see themselves as upright, public-spirited citizens. Three quarters of all Microsoft employees made philanthropic gifts that were matched by the company, resulting in up to $30m in corporate donations to support homeless shelters, zoos, and efforts in 20 cities. Another $70m-$100m of software was donated by Microsoft to schools and libraries.
While Gates's company has been quietly generous, Gates himself was at first reluctant to part with his money. Like his friend Warren Buffett, he said that philanthropy takes effort and time, which he didn't have. He was planning to wait until he was old and then would give most of his fortune away.
In the last several years, Gates has dramatically altered this stance and become the world's foremost philanthropist, having by January 2000 pledged $21.8bn to the Bill and Melinda Gates Foundation, making it the world's wealthiest charitable foundation.
In today's currency, Rockefeller's donations would have totalled $6bn and Carnegie's $3bn. Both Buffett and Gates Senior attribute the change to Melinda, who has more time to devote to charity. "Melinda has spurred him," said Buffett.
Cynics attribute these gifts to a Gates public-relations offensive designed to offset the black eye he has received from the trial. While press considerations may have been a factor in the timing of some gifts, that's a pretty steep price to pay for publicity.
At Microsoft, executives and programmers speak of their work with genuine reverence - they can be as pious as mullahs or priests. When Ben Waldman, who oversaw relations with Apple, is asked to describe the culture of Microsoft, he says with utter solemnity, "People are very passionate about creating great products... We do things to help people solve problems."
New frontiers
What is surprising is that one would be hard-pressed to find an employee who frankly admits that Microsoft is a for-profit company in the business of making money, not a beneficent foundation serving the public interest.
Yusuf Mehdi, who directs marketing for Windows, talks of his work as if it were the frontier of medical science. "There's the same feeling you have in college - I can do something great!" How did he square these sentiments, I asked, with the sometimes John Gotti-like behaviour described in court? "What I would say is that a lot of this legal stuff comes from competitors, not from end users. What the trial is is sensationalist bits and pieces. The trial was supposed to be about bundling. I'm not saying we're not aggressive. We get after it. But it's in the interest of doing what's best for customers."
Such sanctimony is common at Microsoft, from Bill Gates down. "What we aim to do is to make tools to make people's lives better," Gates once told a congressional hearing. There is a tendency at Microsoft to talk about consumers, not profits. No doubt, Microsoft could not recruit the best and brightest without conveying a belief that it is waging a holy war to better serve consumers, improve computing, do 'cool' things.
But it is weird that Microsoft executives rarely speak of fat profits or rich stock options, although executives in their twenties drive BMWs and those in their thirties establish private foundations and often retire, and Microsoft hogs as profit an extraordinary forty cents of each revenue dollar it collects. Jean-Louis Gassée, the CEO of rival software firm Be, once likened Microsoft's behaviour to that of believers in a religious order, "The Jesuits have this concept of holy effrontery - in defending their cause it's OK to use any means."
Related stories
January 4 2001 Microsoft faces $5bn discrimination claim
November 28 2000 Microsoft says trial infected with error
June 8 2000 What once was unthinkable is now a court order'
Useful links
News of the lawsuit from Microsoft.com
The San Jose Mercury's trial special
The US Department of Justice
Judge Jackson's final decision
© Ken Auletta 2001, from WORLD WAR 3.0: Microsoft and its Enemies by Ken Auletta, published by Profile Books Ltd at £17.99 on January 15
